VANCOUVER (miningweekly.com) – The TSX-V-listed equity of lithium explorer Advantage Lithium gained more than 11% on Tuesday, after the company released the positive results of recent drilling and pump tests on the flagship Cauchari lithium brine joint venture (JV), in Argentina.
The latest exploration results include the discovery of a new sandy unit at depth, in the southern reaches of the SE zone resource area.
Importantly, the latest results demonstrate attributes that are important for lithium brine production.
These include a good mix of halite, clay and sand that provide the porosity and permeability a brine operation requires; high flow rates such as the result at the CAU11 well that sustained 19 ℓ/s for 48 hours, which reflected the upper limit of pumping capacity deployed during the test; good grades as CAU11 and CAU08 averaged grades of 515 ppm lithium and 517 ppm lithium, respectively, which is 36% higher than current resource grades; good chemistry with the magnesium-to-lithium about 2.5:1 that should help reduce reagent consumption; and extensive assay intervals ranging from 50 m to 480 m at CAU11 and 60 m to 400 m at CAU08, including a new sandy unit discovered at depth in hole CAU11.
"This excellent flow rate and lithium grade in hole CAU11 confirms the potential of the SE sector, with the drilling programme continuing to provide additional information on the salar geology and brine both laterally and at depth. CAU11 included the exciting discovery of deeper sand units, which is significant for the resource potential in the SE sector," president and CEO David Sidoo commented.
Eight Capital analyst David Talbot believes Advantage could achieve a four-fold resource increase by mid-year, which would bode well for the company's share price.
He sees the potential for resource expansion from the current resource of about 470 000 t of lithium carbonate equivalent (LCE) to a range between 2-million and 2.5-million tonnes of LCE, while management's stated target is 5.6-million tonnes of LCE.
The analyst outlined that 40% to 80% higher lithium grades are an obvious improvement over resource grade; intervals of up to 430 m are over twice the initial resource depth of 200 m; high porosity allows increased brine per volume; and high permeability may extend the assay influence, resource and zone boundaries.
"Advantage's better flow rates, good grades and chemistry should make extraction and processing easier and cheaper. Resource expansion risk, even without incorporating the NW zone, is increasing. We also contend that many peers aren't, at this stage, of rapid resource growth, from high quality brine, in a perfect location between two expanding competitors.
"We believe these [factors] make Cauchari a premier project and relatively more attractive. Management's low-risk development plan, while unwilling to develop a brine operation itself, should be able to offer ample, consistent, high-quality brine to either of its neighbours, both of whom have plans to at least double LCE production," Talbot said in a note to clients.
Advantage recently acquired about 84 701 ha in the Salta and Jujuy regions, including its flagship Cauchari JV project, which is located next to Orocobre's and Lithium America's Cauchari-Olaroz deposits. Orocobre retains a 31.12% interest in Advantage and maintains an excellent opportunity for a right of first refusal or brine offtake agreement with Advantage.
Advantage's TSX-V-listed stock gained 11.32% on Tuesday to close at C$1.18 a share, but remains about 17% off from its recent all-time high of C$1.42 apiece.